How Can Developers Ensure Effective Real Estate Project Management?

Savills experts shared management insights from 29 years of consulting and managing real estate in Viet Nam. According to Ms Vu Kieu Hanh, Director of Property Management, Savills Ha Noi, some operational issues during operations result from a lack of thorough research in the planning stage. Issues can vary but include those related to:  

Traffic systems: Bad planning can result in congestion and traffic issues, which hinder movement. Additionally, if the installation or use of traffic equipment is incorrect, this could pose a potential safety risk. 

Unclear divisions, rights and responsibilities, and equipment: This includes insufficient operational spaces, essential equipment, unsuitable materials, plants, furniture, and a lack of explicit demarcations between user groups from the outset. Additionally, if the rights, obligations, and responsibilities of owners remain unclear this will complicate future maintenance and operations. Design considerations are also crucial, as unsuitable designs for the project's scope and functions will expose residents or tenants to numerous potential risks and complicate the operation process. 

Unclear and insufficient building regulations: This often causes difficulties in implementation. For residential projects, developers normally use standard regulations rather than developing bespoke rules based on the design and complexity of the project. A generic approach is often impractical and fails to specify a comprehensive resolution to the issue. In addition, generic regulations frequently delineate permissible and impermissible actions yet fail to specify sanctions. 

Poor operational cost control: During the early stages of development, some projects fail to adequately account for operational issues in determining costs. Not considering alternative financial scenarios can result in insufficient operational capital and poor cash flow. This could result from ongoing changes in financial models, market conditions, legislation, tax policies, and a lack of financial planning to account for operating and maintenance expenses. This may be the case, particularly in complex projects, because developers do not anticipate or reach an agreement on the owners' financial commitments.

Ms Hanh analysed: "Problems that arise throughout project operations can be difficult to resolve, which impacts the relationships of associated parties, including developers, residents, and the management team. Operating a project requires a professional team that understands complex procedures, including building management plans, traffic plans, air conditioning systems, electricity and lighting, landscaping, the requirements for managing private versus public areas and efficient cost planning. A project that does not fully consider operational factors in architectural design, technical systems, public and private ownership aspects, budget development, or internal regulations would undoubtedly produce operational strain once the project is put into operation. Furthermore, the law does not yet require the specific identification of public and private ownership, so there are still numerous challenges in practice. However, these issues can be avoided if the project is properly designed and planned from the start." 

Ms Tran Minh Ai, Senior Director, Property Management, Savills HCMC said that projects should use experienced consultants from the initial stage to review the entire architectural and electromechanical design and then make appropriate proposals for each stage of the project. 

"Accurate calculations of pre-operation costs, project operating costs, cost allocation models, scenarios, and financial models of the project must be taken into account. At the same time, the analysis of ownership areas in the project is a problem that must be addressed from the beginning when presenting the master plan. Ownership of specific areas must be clearly distinguished between public and private ownership, such as state-owned areas, public ownership of the overall project, private ownership of a retail centre, private ownership of an apartment, and private ownership of an office. Developers must understand how many different types of ownership can exist within a single project, as well as who is responsible for each site and piece of building equipment. It is critical to understand who will be responsible for any revenue or costs incurred throughout operations. This can be simply addressed by coding drawings based on the sort of area held. Proposing each owner's rights and obligations for each sort of ownership area and building a set of internal regulations tailored to the project, are key solutions," Ms Ai emphasised. 

Calculating and considering the operations of a building when it is first conceptualised is critical to minimising disputes once it is put into operation.  

Also, the property management consultancy unit's capability and experience are critical factors in property management and usage. Since they have a direct impact on the quality of life of residents, visitors, and tenants. Therefore, it is critical to first identify a professional, qualified management unit and allow them to participate early in the development of a project plan to ensure careful case calculation, maintain transparency, and minimise necessary risks after the project is operational. This is significant for the project's efficiency, from space utilisation to operations, as it ensures financial stability, and risk management, and increases experience for future residents and tenants. From there, it protects and even boosts the value of real estate projects, whether residential or commercial. 

Conclusion 

Savills is Viet Nam's leading property management and consultancy team. With over 130 projects now under Savills management and 29 years of experience in Viet Nam, our professional Property Management team can support developers from the early stage of projects to minimise any possible risks when the project is put into operation.